Chris Beams joins the show to talk about Bisq, the P2P decentralized Bitcoin exchange and open-source desktop application that allows you to buy and sell bitcoins in exchange for national currencies, or alternative crypto currencies. We get some background on the issues faced by crypto exchanges like CoinBase, and the now defunkt Mt. Gox. We discuss whether or not Bitcoin is a censorship resistant payment system and what it means to have anonymous transaction currency options. Bisq also has an interesting white paper about its own DAO (Decentralized Autonomous Organization) to support its contributors and we discuss that in detail at the end of the episode.
Chris Beams: …and I like to think that we’ve done a pretty decent job of that, but given that we’re actually adding quite a bit of complexity into the picture… Like you said, Coinbase, or Bitstamp, or any centralized exchange that people might choose to use today, are extremely convenient, by comparison to what they were a few years ago, and indeed, by comparison to Bisq. It’s just a higher sort of profile of engagement that we have to ask the user to understand and comprehend, and so on. There’s a kind of essential complexity to doing this in a peer-to-peer way that I don’t think will ever be lower than the essential complexity involved in interacting with a centralized exchange.
We also don’t think that that’s a fundamental problem, that there’s that greater complexity, because what you’re getting for it is greater privacy. Indeed, much greater privacy with Bisq, and that’s really the core value proposition or reason that Bisq exists.
We’ve talked about security so far, right? Using Bisq, and using all these other things that we’re talking about is a great way to make sure that your funds don’t get stolen and can’t be stolen; you’re eliminating a trusted third-party, you’re eliminating a security hole by taking a centralized exchange out of the loop - that’s great, that’s security, right? But then there’s privacy, and that’s where we get back to the beginning with Bitcoin, and saying “We have this amazing global blockchain etc. It’s all permissionless, it does for money what the internet did for information.” The blockchain and Bitcoin have the potential to do for money what the internet did for information.
[28:04] If you think about pre-web, we had a select set of gatekeepers, media organizations - TV, radio, news outlets etc. Post-web we have an explosion of people becoming their own TV, radio, news and consuming the TV, radio and news of other self-producers and self-publishers. That dream of the internet and the web has been totally realized and continues to be realized to ever greater degrees today. And where we are now, certainly where we were in 2008-2009 was very much like we were in the media landscape pre-internet, with regards to banks and money and finance and so on. There’s gatekeepers - there’s a few banks, there’s financial institutions, there’s governments, there’s regulatory bodies etc., and they have a whole lot to say about what’s possible with your money, with money in general, and so on, and that’s why Bitcoin has been so deeply exciting to so many technologists.
A glance at the news today is all about the price and all about an 18-year-old kid who got rich because he bought $1,000 worth of Bitcoin when he graduated high school, or whatever it was five years ago. Those are fun stories, and of course it’s sensational, and it’s all also true, right? People made a lot of money. But why did all of these people get engaged and why have all these people been in this space now for years and years? It’s because of what’s possible. It’s because of that amazing promise of what happens when we have essentially the internet of money, if you will, or more broadly, the internet of value exchange. We now have the possibility to exchange value at a distance, with people who we don’t have a high degree of trust with, and that was simply not possible prior to Bitcoin without having a trusted third-party, some intermediary, a Paypal if you will, in the middle.
So if that’s what Bitcoin made possible, it starts to make sense why we thought Bisq was so important, because you wanna have the ingress and egress from that system, right? Getting into Bitcoin from fiat - people call it national currencies “fiat” in the space, if people aren’t familiar with the term. So US dollars, yen, euros, whatever - that’s all fiat money… Getting into Bitcoin from fiat, so buying Bitcoin for dollars, getting out of Bitcoin, selling your Bitcoin for dollars or euros - that’s a really important part of the system. It’s not Bitcoin itself, this kind of ancillary thing at the edges, but it’s incredibly important, because as people exchange that money, and if they’re doing it via, say, a centralized exchange, if they’re doing it anything other than a person-to-person or peer-to-peer over the internet way, then somebody else besides you and your counterparty knows about that transaction, has a record of that transaction, and centralized exchanges are - the vast majority of them - subject to regulations that say they have to know their customer, they have to get ID verifications… This isn’t perfectly true, but in many cases - most cases - you’re dealing with requirements where people have had to give their identities to these organizations. That information can get out, and does get out. It can get out via hacks, you can get doxed, it can get out via government requests, it can get out in a number of ways. It’s just as vulnerable as the Bitcoin that you’re storing there, actually.
[32:06] When you couple that privacy risk with the fact that Bitcoin is itself a totally transparent system of value exchange, in that it’s a perfectly trackable, perfectly treaceable, you can follow the coin through every single transaction on the blockchain - putting your name, having the possibility of putting your name and personal information on any one transaction, especially the first transaction where you buy your first Bitcoin, or anytime you buy a new Bitcoin, that means that it’s possible for entities that you might not want to be able to, to track that coin all the way through the Bitcoin blockchain, and that does happen; that technology is getting more and more sophisticated as we speak. The so-called chain analysis systems and companies - that’s what they do.
So Bisq’s raison d’être here - really why does it exist - is for the protection of individual privacy, to give people who want it, people who need it, people who value it, the ability to get in and out of Bitcoin without ever putting their personal information on these transactions.
